Question

Beginning balances of Express Lane Company’s accounts as of January 1, 2017 as given below: Beg...

Beginning balances of Express Lane Company’s accounts as of January 1, 2017 as given below:

Beg Balance

Account Title

Debit

Credit

Cash

242,600

Accounts Receivable

24,800

Supplies

13,000

Prepaid Insurance

0

Inventory

18,000

Equipment

46,000

Accumulated Depreciation-Equipment

20,000

Accounts Payable

42,500

Salary Payable

16,000

Unearned Sales Revenue

15,000

Capital

250,900

Withdrawals

0

Sales Revenue

Sales Returns& Allowances

Sales Discounts

Cost of Goods Sold

Insurance Expense

Depreciation Expense-Equipment

Supplies Expense

Salary Expense

Total

344,400

344,400

During January 2017, Express Lane Company completed the following transactions:

  • Jan 1: Paid 12 months insurance in advance for $10,800.
  • Jan 2: Purchased 400 units of inventory for 34,000$ from Great Company, on terms, 3/10, n/eom.
  • Jan 4: Purchased 150 units of inventory from Deluxe Company on account with terms 2/5, n/30. Total invoice is $13,500 which includes also freight charges.
  • Jan 5: Paid accrued salary of the December 2016, $16,000.
  • Jan 13: Paid to Great Company.
  • Jan 15: Sold 600 units of goods to Shine Company for $90,000 ($150 each) on account with terms 2/10, n/30.
  • Jan 17: Received 50 units of goods back from Shine Company (Returned goods are from $80 of cost each).
  • Jan 20: Received payment from Shine Company, settling the amount due in full.
  • Jan 23: Sold 40 units on account, $6,000 ($150 each) for cash to Bridget Company.
  • Jan 26: Owner withdrew cash of 18,000$
  • Jan 27: Purchased supplies for cash of $7,000.

On January 31, 2017 Express Lane Company completed following adjusting entries:

  • Expiration of prepaid insurance for one month
  • Depreciation of equipment for the month, $4,500
  • Supplies on hand, $12,000
  • Unearned sales revenue earned is, $12,000.
  • Accrued salary of the January 2017 is $16,000 which will be paid on the 5th of February.

Requirements:

  1. Journalize and post the January transactions. (Open T-accounts for each of the accounts given in trial balance, do not forget to write beginning balances) (2 points each)
  2. Prepare LIFO schedule to calculate the Cost of Goods Sold (COGS) on the Jan 15th, and 23th. (Beginning inventory as of January 1 include 225 units $80 each which totals $18,000 as given) (17 points)
  3. Prepare unadjusted trial balance as of January 31, 2017. (10 points)
  4. Journalize and post the adjusting entries. (3 points each)
  5. Prepare adjusted trial balance as of January 31, 2017. (10 points)

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